The rules also help guarantee that borrowers aren't forced to pay excessive premiums on homeowners' insurance that servicers require them to carry. In the past, servicers tacked on insurance when they believed someone's coverage had lapsed. The premiums could be several times bigger than on a typical policy.
The rules would require servicers to notify borrowers twice before charging them for insurance. They would have to cancel the insurance within 15 days if borrowers proved that they already had coverage.
Another change from the August proposal concerns an exemption for smaller mortgage companies. The agency had originally proposed an exemption from some rules for companies that service 1,000 or fewer loans. Under the final rules, the exemption would cover companies servicing up to 5,000 loans.
However, the exemption is limited to companies that originate the loans, such as community banks and credit unions. It would not cover small companies that exist solely to buy the rights to collect mortgage payments.
For borrowers who fall behind, servicers covered by the rules will have to begin a notification process after two missed payments. They will be required to outline foreclosure alternatives like reduced monthly payments. Borrowers will be able to apply for lower payments using a single form provided by the mortgage company.
Servicers also must provide information about housing counseling services. The rules are set to take effect in January 2014.
Daniel Wagner can be reached at www.twitter.com/wagnerreports